In most neighborhoods, an announcement is posted to inform everyone that a new housing development is being built. Once the construction of the houses begin, builder's risk insurance takes effect. If you have friends or family that are excited because a much needed room is being added to their existing house, builder's risk insurance should be purchased prior to the renovations. The situations above are just a few indicators regarding the need for risk insurance.
Most people are familiar with homeowners, auto, boat, RV, fire, flood or pet insurance. Builder's risk insurance is one of the most important types of insurance you can have while your project is in the construction stage. This insurance covers losses or damages to your property while under construction. It also covers materials and equipment being used. Coverage is also extended to materials that are being stored and may need to be moved to the construction site. So while material is in transit from one place to another, it is covered.
Sometimes unforeseen accidents happen that can damage all or most of the new construction, but if you are covered under builders risk insurance, you will be able to recoup some of your losses. Fire, theft, vandalism, wind damage, are some of the things that can happen to new construction. Your builder's risk policy will outline your coverage along with what types of incidents are not covered. When you make a decision to have something built either as an addition or a new structure, contact your insurance agent and let them know what type of project that you have in mind.
At times people decide to take on what they consider a small renovation project that ends up a major disaster. In addition, some damage may have been done to the existing structure that may cost thousands to repair. For example, you want to add a window to a small room. But instead, some of the supporting beams of the house are damaged in the process. So, it would be wise to seek the advice of a licensed insurance agent no matter how small the project may be. An element of excitement exists when you have completed a small renovation job without any losses. But, what happens when a project is started and you cannot recover from the losses?
Builders risk insurance is only in force until the project is completed. The premiums should not pose a financial hardship. We are in the self- help era, but to go it alone without the proper insurance coverage for your projects is risky business. For most major commercial projects, you will not be able to start construction until builder's risk insurance is purchased.
No project is too small for you to inquire as to whether builders risk insurance is needed. When possible, ask for an agent that is familiar with builder's risk because this is not a standard policy.
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